Why Is IBM Stock Sliding Premarket Today?

IT consulting and services giant IBM’s (IBM) shares fell sharply in Thursday’s early premarket session despite the solid quarterly results and guidance.

Underwhelming software revenue and CEO Arvind Krishna’s cautious commentary on the earnings call apparently weighed down on sentiment.

IBM stock fell over 5% before the opening bell after ending Wednesday’s session up nearly flat at $282.01.

Armonk, New York-based IBM reported adjusted earnings per share (EPS) of $2.80 and revenue of $17 billion for the second quarter of the fiscal year 2025. The consensus estimates, according to Stocktwits, were at $2.65 and $16.95 billion, respectively.

Infrastructure revenue grew 14% year over year (YoY) to $4.1 billion, while software and consulting revenue rose a more modest 10% and 3%, respectively, coming in at $7.4 billion and $5.3 billion. According to CNBC, the software revenue trailed expectations of most analysts.

Krishna said, “We once again exceeded expectations for revenue, profit and free cash flow in the quarter.” The executive stated that the company’s generative artificial intelligence (GenAI) book of business continues to accelerate, reaching over $7.5 billion.

During a call with the analysts, Krishna stated that geopolitical tensions, although not a major factor, prompted a few clients to move cautiously, according to a transcript provided by Koyfin.

“U.S. federal spending was also somewhat constrained in the first half, but we do not expect it to create long-term headwinds,” he added.

The board approved a $1.68-per-share quarterly cash dividend, payable on Sept. 15, to shareholders of record on Aug. 8.

IBM also maintained its full-year guidance of at least 5% constant currency revenue growth, with forex expected to be a 1.5-point headwind. It raised the cash flow guidance, now expecting the metric to exceed $13.5 billion for 2025.

During the earnings call, CFO James Kavanaugh stated that the company is comfortable with the consensus estimates for revenue and profitability.

On Stocktwits, retail sentiment toward IBM stock turned to ‘extremely bullish’ (86/100) by early Thursday, from ‘neutral’ a day ago, with the message volume improving to ‘extremely high’ levels.

IBM stock is up 30% year-to-date, outperforming the broader market and the tech sector.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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